12/09/2010 @ 10:00AM

Legalizing Online Gambling Is A No-Brainer

Sometimes things do change in Washington, often unexpectedly. Senate Majority Leader Harry Reid, once an opponent of online gambling, is now circulating draft legislation to legalize Internet poker. Reid, like an increasing number of lawmakers, seems to have realized not only that banning online betting, an activity that millions of Americans engage in each year, is impossible, but also that legalizing it could result in increased tax revenue, job creation and economic growth.

Reid’s turnaround is welcome–and long overdue. The proposed policy change makes fiscal sense. Moreover, it is not government’s proper role to dictate what activities private individuals may or may not engage in. And from a practical perspective, Reid’s proposal provides a good opportunity for Congress members from both parties to turn their stated commitment to bipartisanship into substantive change.

If passed, Reid’s legislation would overturn the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), which attempted to ban online gambling by making it illegal for credit processing companies to handle funds related to Internet gambling activities. The result was simply that companies moved offshore. American players continued to gamble online for money, but through riskier venues with fewer protections.

Since UIGEA came into effect, several lawmakers have tried to overturn it. One such effort, the Internet Gambling, Regulation, Consumer Protection and Enforcement Act (H.R. 2267), sponsored by House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., was approved by the Financial Services Committee just prior to the 2010 midterm elections, with a bipartisan majority.

Many observers fear that unless a bill is passed in the lame-duck session, Internet gambling will remain banned, as the new Republican-controlled House is unlikely to take up the issue, under the assumption that Republicans will not support legalizing Internet gambling. Yet, there are numerous reasons why both Democrats and Republicans ought to support the decriminalization of online gambling.

During the midterm elections, Republicans stumped for reducing the size and scope of government, lowering taxes, and freeing individuals and businesses from overregulation. If lawmakers truly believe in those ideals then they ought to support legislation overturning a ban on Internet gambling. Enforcement of such a ban will require an increase in the size of government, more taxpayer dollars and greater incursions into individual privacy.

In addition, online gambling, if legalized, could be taxed like any other economic activity. This could provide millions of dollars in tax revenue, invigorate businesses and create thousands of jobs. While some Republicans might personally find online wagering distasteful, it is not their job to babysit adult Americans, especially when almost every state has some form of legalized land-based gambling such as casinos and state lotteries.

For Democrats who oppose legislating morality, overturning UIGEA, a law that seeks to stop adults from engaging in voluntary and private behavior, would signify a victory for civil liberties and for the freedom to make lifestyle choices.

Overturning UIGEA will also help avoid unnecessary legal complications. As the federal government dithers over UIGEA, several states have taken steps to legalize online gambling within their borders for their citizens and foreign nationals. If Congress perpetuates the nationwide ban while states legalize, it will likely reignite the World Trade Organizations concerns that surfaced when UIGEA originally passed. After years of profiting from American gamblers, UIGEA blocked foreign gaming sites from the profitable American market. Some filed complaints, claiming that the regulation was protectionist and in violation of WTO agreements.

Overturning the ban on Internet gambling is the right thing to do and beneficial for all political parties. For Democrats, legalization increases personal freedom of choice and improves international relations. For Republicans, overturning a ban on voluntary online wagering will limit government bloat, allow individuals to exercise personal responsibility and could result in a massive influx of revenue that could be leveraged into tax reductions. Now that’s change we can believe in.

Michelle Minton is the director of insurance studies with the Competitive Enterprise Institute where she advocates for economic and individual liberty.